Despite a U.S. economy moving forward at snail’s pace and Europe teetering on the brink of collapse, oil prices surged past $100 a barrel in New York Wednesday. Feeding the price action was Enbridge’s acquisition of the Seaway Pipeline from ConocoPhillips and its announcement that it would reverse the pipeline’s direction, easing oversupply caused by a bottleneck in Cushing, Okla., the national price point for crude oil.

Reversing the Seaway Pipeline would bring an additional 150,000 barrels of crude oil per day to the Gulf Coast, where ConocoPhillips, Chevron, Exxon Mobil, BP, and others have refineries, Enbridge said. The company bought Conoco’s 50% interest in the Pipeline for $1.15 billion on Wednesday, and along with now partners Enterprise Products, are expecting the reversal to occur by the second quarter of 2012. By early 2013, they expect the capacity of the reversed Seaway Pipeline to reach 400,000 barrels a day following pump station additions and modifications.

Oil's sharp rise Wednesday reflects the expected shift in Cushing's limited capacity to move crude oil to major refiners, many of which are located on the Gulf Coast. Oversupply at Cushing is one of the major factors behind the spread between U.S. oil prices, measured by the West Texas Intermediate contract, and Brent, the international benchmark, as reported previously.

The spread, which reached $27.88 on October 14, narrowed to less than $9 during the day, as front month WTI contracts rose 2.7% to $102.04. Brent crude, which is much more responsive to global demand, fell 0.5% to $111.68 by 2:32 PM in New York.

Oversupply at Cushing was supposed to be eased by the construction of the Keystone XL Pipeline, which would run from the oil sands in Alberta, Canada, through Cushing, and to the Gulf Coast. The construction of the pipeline was halted by the Obama administration after environmentalists from Nebraska suggested the proposed path of the pipeline threatened a freshwater aquifer that provides drinking water for 1.5 million people, according to Bloomberg.

TransCanada, the company that was building the pipeline, suggested it was looking to build only one part of the extended pipeline now, connecting Cushing to the Gulf, before waiting for approval for the full project. TransCanada is still awaiting regulatory approval, but the construction of that portion of the pipeline would also ease oversupply and put further support under crude oil prices.

Gasoline prices are one of the major drivers of overall consumer prices and inflation. On Wednesday, the Bureau of Labor Statistics released a report showing the consumer price index fell 0.1% in October, but rising WTI crude prices would put upward pressure on CPI. As Fed Chairman Ben Bernanke has made clear on several occasions, high gasoline prices hurt both consumers and manufacturers, increasing transportation and input costs.

The addition of further transport capacity from Cushing to the Gulf is a positive catalyst for WTI crude oil prices. Citi’s analysts suggest the Brent-WTI spread will probably converge to $4 to $5 per barrel by next summer. With Brent set to average $115 in 2012, it does seem like higher oil prices are here to stay. (Below is a chart of USO, an ETF which tracks the spot price of WTI light, sweet crude oil).